Affordable Requirements Ordinance (ARO)

The Affordable Requirements Ordinance (ARO) requires residential developments in the City of Chicago that receive City financial assistance, certain zoning approvals, or City-owned land to provide a percentage of units at affordable prices. The ordinance applies to residential developments of 10 or more units and requires that developers provide 10 percent of their units at affordable prices, either by offering them on site or paying an "in-lieu" fee, the amount of which varies by neighborhood. The ordinance also applies if:

  • A zoning change is granted that increases project density or allows a residential use not previously allowed
  • The development is a "planned development" within the downtown area

First adopted in 2007 and last revised in 2015, the ARO is undergoing a major revision in 2021. The ordinance, currently under consideration by the Chicago City Council, would encourage the creation of more affordable units downtown, and the creation of more family units, among other key provisions.

Proposed 2021 Revision

Mayor Lightfoot introduced the revised ARO to City Council in March 2021.  The revised ARO expands off-site options that target Chicagoans in the greatest need for affordable rental housing, while also focusing on anti-displacement measures that allow long-time residents to remain in their communities and benefit from redevelopment. The revised ARO will also encourage the production of more affordable and family-sized units, while also maintaining much-needed funding for current programs that support thousands of low-income renters.

The revised ordinance increases the affordable requirement downtown, in certain neighborhoods with low current levels of affordable housing, and in neighborhoods facing displacement of low-income residents from 10% to 20%. It also reduces the number of units that may be paid out with in-lieu fees from 75% to 50%.

Additionally, the revised ARO will:

  • Allow off-site units to be built in any part of the city lacking in affordable housing or threatened with displacement
  • Require that if the triggering development is in a transit-oriented development (TOD) zone the off-site units must also be in a TOD zone
  • Add mandates and incentives for developers to create deeply affordable and family-sized affordable units
  • Increase accessibility standards and adopt preferential leasing for tenants who need an accessible unit
  • Require income averaging at 60% and 50% area median income (AMI) tiers to accommodate more low-income earners
  • Add a 100% AMI tier when matched with subsidies for the lowest-income earners

The revised ARO, currently available for review, has been referred to the City Council Committee on Housing and Real Estate.

The ordinance is the result of an 18-month process that began in October 2019 with a public call for applications for an Inclusionary Housing Task Force, which published its report in September 2020. In addition to the task force, DOH solicited input from focus groups, public comment, a City Council subject matter hearing, and months of follow-up meetings with developers and advocates to inform the proposal as introduced.

Inclusionary Housing Task Force

The Inclusionary Housing Task Force first met in December 2019. At the direction of Mayor Lightfoot, the group was charged with recommending improvements to the ARO and broader inclusionary housing policies.

The Task Force issued an Inclusionary Housing Report in fall 2020, which makes several recommendations on the ARO to improve its efficacy in creating new units for affordable housing across the city. The recommendations include:

  • Increasing the proportion of required affordable units that must be built, rather than paid for with an “in-lieu” fee
  • Building more deeply affordable and family-sized units
  • Offering more flexibility for off-site units, including through partnerships with affordable developers
  • Strengthening accessibility requirements
  • Exploring a centralized leasing and marketing system
  • Creating additional incentives for market-rate developers
  • Creating a sustainable, dedicated source of funding for affordable housing

The Task Force was co-chaired by Ald. Walter Burnett (27th), Ald. Harry Osterman (48th), Ald. Byron Sigcho-Lopez (25th), Tony Smith of PNC Bank, Stacie Young of Preservation Compact, and Juan Sebastian Arias of the Office of the Mayor. A complete list of task force members is available.

Inclusionary Housing Cover

Inclusionary Housing Task Force Staff Report 

Income Limits and Long-Term Affordability

For-sale units produced through the Affordable Requirements Ordinance must be affordable to households at or below 100 percent of Area Median Income (AMI). Rental units must be affordable to households earning up to 60 percent of AMI.

The maximum monthly rent tables, updated annually, are available for review on DOH's website.

Units built under the ARO are required to remain affordable over time. Some units will have recapture mortgages to regulate the long-term affordability. At the time of purchase, the City records a 30-year lien for the difference between the unit's market price and its affordable price. Other units will be targeted for the Chicago Community Land Trust (CCLT). These units will have a 30-year restrictive covenant with a maximum resale price. The maximum resale price will be the original purchase price plus a percentage of the market appreciation, and in most cases will be a below market price.

See a list of rental properties made available through the ordinance and other city programs. To receive updates on for-sale units as they become available, please contact aro@cityofchicago.org and ask to be added to the CCLT mailing list.

2015 ARO

Projects submitted* on or after Oct. 13, 2015 should utilize the following guidelines and use the following forms.

More Information:

2015 Ordinance (Chapter 2-44-080)
2015 ARO Factsheet
2015 ARO FAQs
2015 ARO Zone Map
2015 ARO Rules
2015 ARO In-Lieu Fee Schedule
2018 ARO In-Lieu Fees, effective Jan. 1, 2018
2019 ARO In-Lieu Fees, effective Jan. 1, 2019
2020 ARO In-Lieu Fees, effective Jan. 1, 2020
2021 ARO In-Lieu Fees, effective Jan. 1, 2021
Tenant Income Certification (TIC) Form
Minimum Standards for ARO Off-Site Residential Units

Forms:

2015 Affordable Housing Profile Form
2015 ARO Web Form
Affordable Unit Details and Square Footage Worksheet
2015 ARO For-Sale Unit Marketing Form 

ARO Rental Unit Marketing Form

 

 

2007 ARO

Projects submitted* before October 13, 2015 and that received City Council approval by July 13, 2016 should utilize the following guidelines and use the following forms.

More Information:

2007 ARO Fact Sheet

Developer's Guide to ARO
2007 Ordinance (Chapter 2-44-070)


Forms:

2007 Affordable Housing Profile Form - Rental
2007 Affordable Housing Profile Form - For Sale
ARO Rental Unit Marketing Form
Affordable Units Details and Square Footage Worksheet                                            

ARO Pilots

The Near North-Near West and Milwaukee Corridor ARO Pilots apply to projects within the boundaries of the Pilot areas that have not received Committee on Zoning or Plan Commission approval by Nov. 1, 2017. Projects involving City land or financial assistance are exempted if they have been introduced to City Council by Nov. 1, 2017. These two Pilots are set to sunset on Dec. 31, 2020.

The Pilsen-Little Village ARO Pilot applies to projects within the boundaries of the Pilot area that did not receive Committee on Zoning or Plan Commission approval by Jan. 1, 2019. Projects involving City land or financial assistance are exempted if they have been introduced to City Council by Nov. 1, 2017. This pilot is set to sunset on Dec. 31, 2023.

To determine if a project is located within a Pilot area, enter the project address in the ARO Web Form.

More Information:

Milwaukee Corridor Pilot Area
Near North/Near West Pilot Area
Pilsen/Little Village Pilot Area

 

Forms:

Affordable Unit Details And Square Footage Worksheet - Near North   
Affordable Unit Details and Square Footage Worksheet - Near West
Affordable Unit Details and Square Footage Worksheet - Milwaukee Corridor

 The ordinances can also be found online.

Related Links:

*"Submitted" means (i) with respect to an application for zoning approval or the sale of city land, an ordinance authorizing the rezoning or city land sale has been introduced to City Council; or (ii) with respect to financial assistance, a complete application has been received and accepted by DPD.

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